In the wake of spiraling rents and costs of living in the emirate of Dubai, many multinational firms looking to invest in the UAE are having second thoughts, prompting industry analysts to assure them that the situation in only passing.

Though most agree that the cost of operating in Dubai can be high, the majority also feel that the current conditions are cyclical and short-term, according to Khaleej Times. If rents begin to ease, they say, the cost of operations will also ease.

"What happened in the housing sector in 2005 was exceptional. This isn't a trend," explained Nasser Saidi, chief economist of the Dubai International Finance Centre (DIFC).

Saidi stressed that rents in the city were stabilizing and that he was not worried about Dubai's competitiveness.

"Dubai over the last three years has been growing faster than China so inflation is inevitable. But look at the wages and incomes. They have been rising as well" he continued.

He also warned, however, that as Dubai was in fact getting more expensive, "Other cities in the region are starting to develop better services as well."

In the meantime, most companies do not plan to move their operations elsewhere. Inflationary pressures and especially escalating rents, company representatives stated, were a natural concern as always."